Archive for the ‘Building Wealth’ Category

Baby Boomers And Retirement: Are You Financially Prepared?

Friday, July 15th, 2016
Financially prepared

Baby Boomers, are you financially prepared for retirement?

America, we’re getting older. Those of us born in the USA after World War II and before 1964 (ages 51-69 respectively) are known as Baby Boomers, and we’re nearing retirement. Are you financially prepared to get to retirement or through retirement? Is there a chance you will not get through retirement because you are not financially prepared to do so? It’s time we evaluate our fiscal health.

None of us knows what’s ahead in the next 1, 5 or 10 years, but there are ways to prepare financially to get us through retirement One of the best ways to ensure your money lasts through retirement is to plan on living longer than you think. Here are four ways for Baby Boomers nearing retirement to get financially prepared:

Reduce Your Expenses and Get Rid of Debt

Take charge of your spending. It’s important to create a budget that you can stick to now in case your income is reduced in the future. If you’re looking for ways to save money, look here: Federal Citizen Information Center.

Stop Self-Investing and Go Pro Instead

The pros can manage a lot of money cheaply. How?

  • Their costs to do what they do for their clients are at an institutional rate
  • They get lower commissions on buying/selling securities
  • They can manage money for a lot less

Your 401(k) and IRA returns can amount to little because money managers charge you “retail” and overcharge for their commissions for sales, management and securities. Costs matter. Find the lowest-cost provider in every retirement fund you have, particularly in your 401(k) if you have one.

Add to Your Income-Producing Investments

Take a look at your investment portfolio. Is it heavy on the stock funds side?  If so, now is a good time to increase the percentage of bond funds or other investments that are designed to provide a steady income for you throughout retirement. Ask your financial pro to review your money distributions.

Invest in Real Estate to be Financially Prepared for Retirement

Real estate is a secure investment, and homeownership is critical in building wealth and financial security over time. That’s important when planning your retirement. Owning is much wiser than supporting a landlord financially and having no equity to show for any of it. Homes appreciate. Owning is far superior to renting because it locks in your housing costs and over time your real costs decline.

In the past two years, home prices have increased more per year than the 4% average that rents have risen per year. And homeownership comes with valuable tax benefits, too.

If you don’t own a home, consider purchasing one. Real estate is a secure investment to use as your retirement fund.

Take advantage of the great real estate market situation. Brooklyn real estate is at an all-time high, but we don’t know for how long.

The bottom line

Because we are nearing retirement, don’t take unnecessary risks to get financially prepared. There is no wisdom in trying to recover losses we may have incurred by putting even more money in risky investments. We will need that money for living expenses throughout our retirement.

But do get financially prepared for your retirement now. Save with purpose and intensity, invest wisely and take advantage of the benefits of today’s great real estate market.

Are you financially prepared for retirement? Are you ready to downsize and simplify as you near retirement? Is it time to sell your real estate investment? Get the help of real estate agent Charles D’Alessandro, your Brooklyn real estate agent with Fillmore Real Estate. Call (718) 253-9700 ext. 206 or email him at [email protected] today!

Teaching Kids About Money and How To Build Wealth In Preparation For Homeownership

Wednesday, December 30th, 2015
Teaching kids about money and how to build wealth

Teaching kids about money and how to build wealth early on prepares them for homeownership.

“Mama, don’t let your babies grow up to be cowboys, …” Bring up your babies to be homeowners! Now that the tune is stuck in your head, let’s talk about teaching kids about money and how to build wealth. It’s a critical life lesson that should be taught early on in their lives. Too bad that it isn’t taught in school or college. That means it’s up to us as parents to teach our kids how to take control of their financial futures.

When it comes to teaching kids about money and how to build wealth, start here:

  1. Practice Self-Control

Put one of your kid’s favorite treats to eat on the table, a Rice Krispies treat, a few pieces of their favorite chocolate or candy, for example. Have them sit down where they can see it, touch it, smell it. Tell them they may choose to eat it now or wait 15 minutes while you go work on the laundry or make an important phone call. Tell them that if they choose to wait while you are gone, when you return you will give them another treat or more of their favorite candy.

The sooner a person learns the difference between instant gratification and delayed gratification, the sooner they’ll find keeping their finances in order easier to do. This exercise teaches kids the difference. They are practicing self-discipline to save for something bigger, something they really want later.

Life gives many opportunities to put this important lesson into practice. Watch for them!

  1. Manage Money

Kids need some sort of “an income” in order to learn this lesson. Chores should be completed without payment because that’s how a family works as a team.

Give your kids opportunities to earn money. Set a price for a special paid project. If more than one kid wants to take on the paid project, do a reverse auction and give it to the lowest bidder.

When paid for completion of a special project, help your kids handle their income with the 80-10-10 rule: 10% goes into savings (a non-negotiable emergency fund), 10% is donated (church tithe, for example), 80% can be spent (or saved) as they wish.

This exercise actually teaches two lessons that many adults find difficult to manage: the importance of saving and giving back.

By the way, when a person gets into the habit of saving money and treating their savings as a non-negotiable monthly “expense,” they’ll have retirement money, vacation money and even money for a home down payment before they know it!

  1. Read a Book

There are a lot of books geared towards teaching kids about money and how to build wealth. This is a great reading list to arm your kids with personal finance knowledge: Nine of the Best Money Books for Kids and Teens.

Rich Dad Poor Dad is a great read for barely-teens on up. No matter how old you are, if you haven’t read it yet, get crackin’! It teaches powerful lessons on the difference between liabilities and assets, the importance of minimizing your expenses and introduces the idea of passive income.

  1. Live Within Your Means

Grandparents, church and Rich Dad Poor Dad teach the importance of living within your means. Unfortunately, today’s society does not. People are encouraged to get whatever they want, because after all, they’re worth it, and they deserve it. Learn more about credit here: Understanding Credit Card Interest

Learning to live within your means can be taught to kids every day. It involves delayed gratification, discipline and being told “no.” You’ll need to be on your toes to watch for these teachable moments.

  1. Invest In Passive Income

Think gumball machine or vending machine here. Then, be prepared to practice patience. It will take time for your kids to mature to the point of understanding passive income.

Show your kids how to buy a gumball machine with say $100 of their own. Suggest a busy store to place their gumball machine in. Now, research together what it will cost to purchase gumballs for their machine. Once your kid guesses how many gumballs they think their machine could sell in a week, help them calculate a profit and loss projection. You’ll need to discuss how much time this passive income business will take and whether or not you will be in a position to purchase a second machine. What Constitutes Passive Income?

  1. Play Games

You should be teaching kids about money and building wealth as early as possible. Many of them are more easily taught and caught when they are older. No matter when you start teaching kids about money and how to build wealth, make it fun. Play games like Cashflow for Kids or Monopoly. Help them learn about business with a lemonade stand, lawn job, babysitting, snow removal, poop scooping or dog walking business. Any one of these businesses can teach kids (and adults!) planning, investing, marketing and executing.

Understanding how money works is the first step toward making money work for you. Kids don’t need a fancy degree or special background to learn how to manage money, nor do you in order to teach them.

Teaching kids about money and how to build wealth while they are very young will help them learn to manage money before they go out into the real world. They will know how to:

No matter what the age of your kids, start them on the right path financially today. If you’d like more in depth resources on managing money, enjoy the following great reads:

Charles D’Alessandro, your Brooklyn real estate agent with Fillmore Real Estate | 718-253-9600 ext. 206 | [email protected]